Vizag Gas Leak: LG Polymers Has ‘Absolute Liability’ Under Law

Supreme Court formulated the extremely stringent standard when dealing with the Delhi and Bhopal gas leak cases.

The LG Polymers plant near Vishakapatnam.

(Photo: Arnica Kala/The Quint)

Video Editor: Purnendu Pritam

When news broke of a chemical gas leak at a plant in Visakhapatnam’s RR Venkatapuram village in Andhra Pradesh on 7 May, the immediate worry was that this may be a repeat of the Bhopal Gas Tragedy of 1984, with some uncanny parallels on how events unfolded.

While the leakage of styrene gas from the LG Polymers plant near Vizag has thus far proved less dangerous than the leak at the Union Carbide factory, 11 people have still lost their lives, another 25 are in critical condition, more than 200 people have been hospitalised, and 1,000 have fallen ill. Hundreds have had to be evacuated from the area.

The law on an incident like this is quite clear: LG Polymers will be responsible for the tragedy, and will need to provide compensation. Here’s what the law says – and how we got here because of a previous such accident, but not exactly the one you might be thinking of.

The Principle of ‘Absolute Liability’

India follows the highest standard of liability for an incident like this, when a hazardous or dangerous substance used for industrial purposes leaks and causes harm to people.

The principle of ‘absolute and strict liability’ was formulated by the Supreme Court in a crucial judgment in MC Mehta vs Union of India in 1986, when the court was dealing with the leak of oleum gas at the Shriram Foods and Fertiliser Industries plant in Delhi.

The opening of this plant had already been challenged in the apex court as being hazardous to the community, and while the main case was being heard, a leak at the plant in December 1985 led to the death of one person and the hospitalisation of several others.

Justice PN Bhagwati of the Supreme Court had to decide what the standard of liability would be in such a case, and this is what he said:

“We are of the view that an enterprise which is engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone on account of the hazardous or inherently dangerous nature of the activity which it has undertaken.”

This means that if there is an accident at a plant like LG Polymers in Visakhapatnam, which involves the manufacture or use of a hazardous substance (like styrene gas here, or oleum gas in the Delhi case) the company which runs the plant has to make sure that it compensates everyone who suffers any sort of harm as a result.

No Need to Show Negligence

For them to be held responsible, there is no need to show they were negligent, or did something which caused the leak – the very fact that it happened from their plant is enough.

There are no exceptions or defences whatsoever to this ‘absolute liability’, which is what makes it makes it stronger than the legal standard that is generally followed in other countries. Till the MC Mehta case, India also followed the concept of ‘strict liability’ – the owner/operator of the business is liable for any non-natural activity on their premises regardless of whether they did anything wrong.

However, unlike absolute liability, under the principle of strict liability, there were some limited exceptions and defences, including an accident caused by an ‘act of god’. While the exact details of the Vizag Gas Leak are not yet entirely clear, it is not hard to imagine that LG Polymers could try to argue that the leak was out of their control because of difficulties arising out of the coronavirus lockdown.

Under the concept of ‘absolute liability’, it needs to be remembered this would make no difference to LG Polymers’ responsibility, and the amount of compensation they have to pay.

It is also important to note that the death toll will not be relevant to the assessment of liability, as per subsequent judgments of the Supreme Court on the issue. Whatever damage has been caused by the gas will need to be compensated for, from deaths to illness, to hospital costs.

While comments made by the police and the company about styrene not being fatal in regular course have already made it to the media, Supreme Court advocate Karuna Nundy warns that a full and proper assessment of the effects of the gas leak remains to be made, and that alone should be the basis for compensation:

“It is still the golden hour of evidence. It is vital at this point for the probe to be judicially monitored, for independent experts from the IITs and other institutions be involved to make sure that it’s not posited as a mere accident due to the negligence of some lower level officials.

The design of the plan has to be looked into, as well as the regulatory mechanism – whether safety audits were being done properly and regularly, as central and state govt agencies will both be responsible for this under the Environmental Protection Act.”

How Will This Work?

The Andhra Pradesh government has already announced that Rs 1 crore compensation will be paid to the families of those who have died. Victims undergoing treatment on ventilators will get Rs 10 lakh each, others who are hospitalised will receive Rs 1 lakh each. The state government will also provide compensation to those who had to visit the hospital, the families who had to evacuate, and those who lost cattle to the gas.

These payments, however, are ex gratia payments by the state government, and entirely separate from LG Polymers’ liability. They will not be able to claim any reduction in the compensation owed because of what the government is paying the victims.

The National Human Rights Commission (NHRC) has issued notice to the Andhra Pradesh government and the Centre over the incident, and an NGO has filed a plea with the National Green Tribunal (NGT) asking for an independent probe into the incident, on similar lines as Nundy’s suggestions.

Claims for Compensation Under Tort Law

Claims against LG Polymers will need to be filed in the courts – to simplify the process for the victims, the state government or the Centre are likely to set up a claims commission which will assist them in doing so, and consolidate the claims into one case. One controversial thing to watch out for is if the Centre decides to act as the representative of the victims, as was done in the Bhopal Gas Tragedy case.

This meant that the USD 470 million settlement arrived at by the central government with Dow Chemicals (which owned the Union Carbide plant), bound all the victims, which has led to a long legal fight by those who said this was improper.

The Supreme Court is still hearing a curative petition filed by the Centre which has argued for additional compensation for the gas leak which killed 3,000 people and affected more than 1.02 lakh others.

The reason this is something to watch out for is because LG Polymers, like Union Carbide, is owned by a foreign company – in this case South Korea-based LG Chem, which is related to the LG electronics company. While foreign companies can most certainly be taken to court in India, the logistics of compensation and prosecution are more complex than for a domestic company – whether this will see the central government try to step in remains to be seen.

The Supreme Court in the Bhopal Gas Tragedy case also followed the principle of absolute liability, though obviously the settlement arrived at meant the compensation was not ordered by the court.

While the number of people affected in the Vizag Gas Leak is far smaller than those affected in Bhopal in 1984, and the styrene gas is not expected to cause the kind of long-term damage caused by the gas in that case, the principle of absolute liability should mean that a substantial amount of compensation will need to be paid to the victims, and there will be special/exemplary damages over and above the costs incurred by them.

Public Liability Insurance Act Claims

Over and above the compensation that can be awarded by the courts, LG Polymers will also be responsible to provide payments to any victims who make a claim under the Public Liability Insurance Act 1991.

Under this law, passed following the Bhopal Gas Tragedy case in the apex court, people who have suffered harm from a hazardous substance used by an industry, can file a claim with the local Collector within 5 years of the accident.

The Collector then assesses the claims and specifies a compensation amount which has to be paid immediately, through an insurance policy which all companies which utilise any hazardous substances have to take out. The advantage of this is that victims could get payouts quicker than through the courts – and can still approach the courts for higher compensation.